- 29 -
Regs. An item is material for purposes of section 446(e) if the
time for including it in income or deducting it is at issue.
Knight-Ridder Newspapers v. United States, 743 F.2d 781, 798
(11th Cir. 1984); Wayne Bolt & Nut Co. v. Commissioner, supra at
510; sec. 1.446-1(e)(2)(ii)(a), Income Tax Regs.
Petitioner's officers' bonuses are material items for
purposes of section 446(e) because petitioner seeks to change the
year it deducts the bonuses from the year it declared them to the
following year. Wayne Bolt & Nut Co. v. Commissioner, supra at
509-510; H.F. Campbell Co. v. Commissioner, 53 T.C. 439, 447
(1969), affd. 443 F.2d 965 (6th Cir. 1971); Fruehauf Trailer Co.
v. Commissioner, 42 T.C. 83, 103 (1964), affd. 356 F.2d 975 (6th
Cir. 1966); sec. 1.446-1(e)(2)(ii)(a), Income Tax Regs.
3. Whether Petitioner May Change Its Accounting Method
Without Respondent's Consent Based on a Change in Law
Before raising the section 267(a)(2) issue here, petitioner
had consistently deducted its officers' bonuses in the year it
authorized them. A change in the consistent treatment of a
material item generally requires the Commissioner's consent under
section 446(e). Witte v. Commissioner, 513 F.2d 391, 393-394
(D.C. Cir. 1975), revg. T.C. Memo. 1972-232; H.F. Campbell Co. v.
Commissioner, supra; Fruehauf Trailer Co. v. Commissioner, supra.
Petitioner contends that an accounting change made to comply
with section 267(a)(2) does not require respondent's consent.
Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 NextLast modified: May 25, 2011